6 ways to cut operational costs

| September 5, 2018

If you as an entrepreneur or a manager find it hard to control your expenses, it won’t matter how profitable your business is, due to the fact that you’ll always be behind. You see, there’s a difference between spending money and wasting money.

Paying bonuses to your employees, ordering supplies, innovating your equipment or expanding your office are investments that have to be made at one point, however, paying more than you should on your utility bills and paying unnecessary fees is literally a waste of money.

This is due to the fact that it doesn’t really give any effect, whatsoever. With that in mind, here are several ways in which you can move past them by reducing operational costs for your small business.

Make your own sales platform

As a retailer, you might start with a token online presence, while relying on your store to generate most sales. In this scenario, you might feel happy to sell your products over Amazon and eBay, however, as your operations start expanding, you might find that this sales method actually loses money.

This is due to the fees that can be avoided by simply making your own platform. Since an e-commerce website isn’t that expensive to make, you might not want to postpone this decision for too long or wait for these online sales to become substantial.

Pay your bills online

One of the ways to directly save money is to pay all your bills online. By paying via an online service, you’ll on average spend $0.5 per bill, while an average small business spends somewhere around $12 for each bill sold.

Apart from this, there are numerous other perks for doing so, like the ability to go green (paperless), the simplicity of paying with your credit card and the easiest way to consolidate all your bills in one place. When this gets combined with the fact that you don’t actually have to commute in order to pay the bills, what you get is yet another passive way of saving money by paying your bills online.

Opt for better long-term solutions

Some entrepreneurs prefer to save money by canceling their landline, yet, this is not a great long-term practice. First of all, the overhead of owning a landline with 1300 numbers can cost you as little as $10 per month and the reputation boost that comes from it stands to be worth the cost.

This is what we talked about in the introduction, saving money by cutting vital business functions is not the same thing as reducing the operational cost. In order to avoid making this mistake, you need to think past your next month’s payables.

Invest in technology

The next thing worth noticing is the fact that technology saves you quite a bit of cash. For instance, by skimming on a vital software and going for a free version instead of the premium one you’ll save money at the expense of your team’s productivity.

In fact, you might restrict the potential of your employees so much, that you’ll be forced to hire new people in order to make up for this productivity loss. This means that by saving $50 to $200, you’ll increase your operational costs by several thousand dollars. The equation is more than simple and straightforward.

Outsource

Sometimes, hiring someone else to do your job (or at least a part of it) for you can be a cheaper way to run your business. This, on the other hand, is a question that you need to answer as honestly as possible. Imagine a scenario where you want to start a customer service department. How would you do it? First of all, you get to make an estimate of how many people you would have to bring in.

Then, you consider how much time they would spend in training and how much you’ll have to pay for this process. Then, if there’s any special equipment or software they need, you need to add this to the list, as well.

In the end, you should also keep in mind that even when all of this is said and done, your team won’t be even close to the proficiency of these experts from specialized companies, at least for a while. With all of this in mind, it becomes more than clear why outsourcing saves money.

Practice stand-up meetings

Lastly, time is money, and according to some of the latest surveys, an average office worker spends approximately 31 hours every month in meetings. Now, let’s take into consideration the probability that your office operates on a standard 9 to 5 basis.

According to this equation, you would spend almost four work days every single month at various meetings. There are four days that your production team isn’t at their post and four days that your sales team isn’t talking to clients. All in all, by just practicing short stand-up meetings, you stand to save a small fortune in operational costs.

Conclusion

The main reason we picked these six methods is due to the fact that they give you a chance to save money, without sacrificing anything of worth. In other words, these are practices you can start practicing as soon as today, without the fear of any drawback or downside.

 

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David Webb

David Webb is an Australian business consultant.